Hong Kong: Offshore Industry Tipped For Growth, Driven By Demand From Emerging Markets, According To Leading Offshore Survey

Greater China, Southeast Asia Seen as Global Leaders
in Use of Offshore Vehicles, Drawn by Efficiency & Legal
Frameworks

Key Highlights:

OIL's sixth annual survey shows:

The offshore industry will be a
leaner, more resilient and confident member of the global economy
by 2020, driven by demand from increasing numbers of HNWIs in
Asia.

The offshore industry remains a
critical conduit for the efficient flow of investment capital
through international markets

Greater China and Southeast Asia have
emerged as the top two regions for growth in the use of offshore
financial centres over the next five years

The emergence of "super
jurisdictions" – large cities or city-states that can
provide substance for structures, plus expertise and resources to
clients. These centres, including Hong Kong and Singapore will
continue to grow in importance over the next five years

Demand for asset protection, wealth planning and funds by high
net worth individuals in Asian countries will drive continued
growth in the offshore industry, according to OIL's sixth
"Offshore 2020" annual market research study.

OIL, the leader in international incorporations and corporate
services focused on serving the financial and professional
intermediary sectors in Asia, interviewed 320 industry experts,
including CEOs, lawyers and fund managers to shine a light on the
current state of the industry and examine trends that will impact
the industry's future.

OIL Group Managing Director, Jonathon Clifton said
non-tax-driven demand drivers such as wealth planning and asset
protection would increase due to the rise in wealth in Asian
countries and an increase in the understanding of wealth management
solutions.

"Offshore jurisdictions offer investors modern, cutting
edge legislation, the provision of neutral venues that can be
trusted by all parties involved in a transaction and a tax neutral
environment that ensures profits are not taxed up to three
times," Mr Clifton said.

Mr Clifton said offshore jurisdictions had long served as
neutral venues for companies to make cross-border investments with
their robust and familiar legal systems and professional
infrastructure providing reassurance to investors.

"Offshore jurisdictions play a vital role in enabling
global economic development by reducing cross border 'friction
costs' and facilitating the global flow of capital. In a
nutshell, the offshore industry serves as the plumbing of our
integrated modern global economies."

The survey, which this year sampled respondents from not only
Asia but the rest of the globe to ensure a clear picture of global
sentiment in the offshore industry, overwhelmingly ranked Greater
China and Southeast Asia as the top two regions for growth through
to 2020 based on the rising wealth within the region. RMB
liberalisation and burgeoning Chinese wealth, in particular, are
giving rise to a client base eager to protect and diversify
assets.

"Asia Pacific now holds claim to more millionaires than
does the US. Entrepreneurs and high net worth individuals are
largely regarded by respondents as the primary contributors to
offshore's growth in this region over the next five years. Due
to that influx of wealth, it is therefore not surprising that
respondents have again ranked Hong Kong and Singapore as the most
important jurisdictions come 2020, followed by the BVI and Cayman
Islands," Mr Clifton said.

Mr Clifton said the rise of 'super jurisdictions'
– defined as a geographical source of clients, markets where
other clients go to do business and jurisdictions in their own
right - was another trend that had emerged from this year's
research.

"Hong Kong, Singapore, London and Dubai all meet the
criteria to at least some degree. All can provide substance for
structures via a strong employee base and sound business
infrastructure, plus expertise and resources to clients. All are
large cities or city-states that now compete with offshore to some
degree. Survey respondents believe this trend will continue over
the next five years."

The survey highlights that traditional offshore jurisdictions,
namely the Cayman Islands and the BVI, remain resilient in the face
of competition with the Cayman Islands headed to break the 100,000
mark for total registrations by the end of this year.

"Respondents noted that although geopolitical and economic
crises may arise, economic uncertainty does not necessarily hinder
offshore's appeal. However, what we are seeing is other
jurisdictions shifting away from acting as collaborators to
competitors. Hong Kong, Singapore, Luxembourg, Delaware and the
Netherlands are considered contenders for usurping offshore
centres, largely due to the perception that they are more
respectable," Mr Clifton said.

While the industry faces challenges presented by regulatory
initiatives, including base erosion and profit shifting (BEPS),
common reporting standards (CRS) and FATCA, the survey shows the
offshore industry remains positive on its long-term future.

"Change is a constant in our industry and we know that the
regulatory environment will continue to shift. Regulation that
balances greater transparency with the need to support companies
wanting to expand globally will undoubtedly make our industry
stronger and ultimately bring it into the mainstream. However,
regulation should enforce best practice within our industry, not
seek to stamp it out," Mr Clifton said.

"We believe that by 2020 the offshore industry will be a
leaner, more resilient and more confident member of the global
economy."

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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